UARIZONA OMSA Audit EXAM 1 Review 2023 with complete solution
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UARIZONA OMSA Audit EXAM 1 Review 2023 with complete solution
Which of the following groups is commonly thought of as a stakeholder in the financial reporting process?
a) Investors
b) Banks
c) Labor Unions
d) Customers
e) All of the above
e) All of the above
What is an important way in wh...
uarizona omsa audit exam 1 review 2023 with complete solution which of the following groups is commonly thought of as a stakeholder in the financial reporting process a investors b banks c labor
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UARIZONA OMSA Audit EXAM 1 Review 2023 with
complete solution
Which of the following groups is commonly thought of as a stakeholder in the
financial reporting process?
a) Investors
b) Banks
c) Labor Unions
d) Customers
e) All of the above
e) All of the above
What is an important way in which auditors help to enhance the credibility of
financial reporting?
a) Performing consulting services for clients
b) Deterring errors in the financial statements
c) Obtaining negative assurance over the financial statements
d) Investing in their clients' stock
b) Deterring errors in the financial statements
Which of the following statements about audit quality is false?
a) It is difficult to measure audit quality
b) Audit firm culture is important for audit quality
c) In general, audit quality can be thought of as a dichotomy that is either "high"
or "low"
d) Skills and qualities of the auditors is important for audit quality
e )None of the above (all of the above are true)
c) In general, audit quality can be thought of as a dichotomy that is either "high" or "low"
Which of the following statements about fraud is false?
a) Fraud is always intentional
b) An example of fraudulent misappropriation of assets is when managers
attempt to make their company look better by overstating assets on the balance
sheet
c) Prior to the early 2000s, auditors were not responsible for detecting fraud
d) The use of executive stock options is an example of the "incentives"
component of the fraud triangle
e) None of the above (all of the above are true)
b) An example of fraudulent misappropriation of assets is when managers attempt to
make their company look better by overstating assets on the balance sheet
Which of the following factors did not play a role in congress passing the
Sarbanes Oxley Act of 2002?
a) Increased demand for accounting firms to provide consulting and other "value-
added" services.
b) Collapse of the mortgage-back securities market caused several financial
institutions, like Lehman Brothers, to go bankrupt.
c) Auditors failed to detect/prevent several major corporate frauds, like Enron and
Worldcom,
,d) All of the above played a role in congress passing the Sarbanes Oxley Act of
2002.
b) Collapse of the mortgage-back securities market caused several financial institutions,
like Lehman Brothers, to go bankrupt.
One of the primary goals of the Sarbanes Oxley Act of 2002, and the PCAOB, was
to restore public confidence in which group?
a) The SEC
b) Boards of directors
c) Internal auditors
d) External auditors
d) External auditors
Which auditing standards apply to audits of non-publicly traded U.S. companies?
a) AICPA Standards
b) IAASB Standards
c) PCAOB Standards
d)All of the above
a) AICPA Standards
Under common law, to win a lawsuit against an auditor, third parties generally
have to prove which of the following?
a) The parties suffered a loss
b) A loss occurred due to reliance on misleading financial statements
c) The auditor knew, or should have known, financial statements were misleading
d) All of the above
d) All of the above
In which of the following settings would the Securities Act of 1933 apply?
a) An audit client wishes to sue its auditor for breach of contract
b) Investors have reason to believe that the auditor of a company's stock acted
with scienter
c) Investors in a company's stock relied on misleading financial statements
d) Investors in the initial public offering of a company's stock wish to sue that
company's auditor
d) Investors in the initial public offering of a company's stock wish to sue that company's
auditor
Which term describes the type of threat that occurs when top management
threatens to replace the audit firm because of a disagreement over an accounting
issue?
a) Management participation threat.
b) Undue influence threat.
c) Adverse interest threat.
d) Financial self-interest threat
b) Undue influence threat.
Julie Webb, CPA, takes out an automobile loan with First National Bank of
Wellville (FNBW) while attending the University of Wellville. Julie graduates one
year later and is hired as an auditor by Best and Driftwood, LLP. Her first
assigned audit engagement is with First National Bank of Wellville, a client of
Best and Driftwood. As a new audit assistant, Julie continues to pay her
, automobile loan payments each month. Which of the following best describes
Julie's independence status?
a) Impaired because Julie has a direct financial interest in FNBW.
b) Impaired because Julie has a material indirect financial interest in FNBW.
c) Not impaired because Julie has an immaterial indirect financial interest in
FNBW.
d) Not impaired because Julie is permitted to take normal loans from FNBW.
d) Not impaired because Julie is permitted to take normal loans from FNBW.
The auditor is normally not permitted to divulge confidential information obtained
from a client. Which of the following situations would be a violation of this
standard?
a) To respond to the information request of a major shareholder.
b) To comply with a validly issued and enforceable subpoena or summons.
c) To accommodate the review of client audit work papers under AICPA, PCAOB,
or State Board of Accountancy authority.
d) All of the above are violations of client confidentiality.
a) To respond to the information request of a major shareholder.
Independence is required for which of the following types of services?
a) Audit work.
b) Tax work.
c) Consulting.
d) Independence is always required of the CPA.
a) Audit work.
Which of the following best describes professional skepticism?
a) An intent to deceive.
b) An attitude of intrusion and obstinacy.
c) A firm commitment to auditing standards and ethics.
d) An attitude that questions the veracity of information.
d) An attitude that questions the veracity of information.
Which of the following represents an ethical consideration or challenge particular
to auditing?
a) Maintaining a good reputation is especially important for auditors
b) Performing additional audit work might not change the conclusions an auditor
might form about a company's financial statements
c) Auditors and client personnel frequently disagree
d) Auditors might not realize they are making an inappropriate judgment
e) All of the above
e) All of the above
What is an accelerated filer?
a) A publicly traded company with market capitalization less than $75 million
b) A publicly traded company with market capitalization greater than $75 million
c) A publicly traded company with less than 75 million outstanding shares
d) A publicly traded company with more than 75 million outstanding shares
b) A publicly traded company with market capitalization greater than $75 million
What do auditors deliver at the end of the audit of an accelerated filer?
a) An opinion on the effectiveness of internal controls.
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